MSE News: Escape energy lock-ins as prices soar

davidgmmafan

"It is a surprise and a disappointment that Consumer Focus appear silent on the issue."

Given that I can't make head nor tail of what Ofgem is saying I don't know what they could be expected to say. My main point is if it is unclear, and it is a licence condition, Ofgem's the culprit as in the example I gave where they said NPower was using a condition designed to apply to prepayment customer to apply to all customers. Surely it would be fairly easy to state that explicitly and leave no wiggle room?

Consumerist

davidgmmafan wrote: »

Given that I can't make head nor tail of what Ofgem is saying I don't know what they could be expected to say.

My understanding of Ofgem's position is that if the price increase would require a change to the terms of contract then no exit fee would be payable. i.e. the contract has been unilaterally changed.
However, where the prices are linked to a reference price (i.e. a discount to a standard tariff) then no change to contract is required because the contract links the price to the standard tariff. i.e. if the standard tariff changes then so does the linked tariff without changing the contract.

I don't quite follow the logic of such a position but does that make any sense to anyone else?

Edit
This seems to be similar to the position of banks relating credit-card interest rates to bank rate so that they don't have to advise customers of changes in their interest rates if they change them in line with bank rate. This has the effect of cutting off the option to reject rate changes.

lektr0n

Consumerist wrote: »

My understanding of Ofgem's position is that if the price increase would require a change to the terms of contract then no exit fee would be payable. i.e. the contract has been unilaterally changed.
However, where the prices are linked to a reference price (i.e. a discount to a standard tariff) then no change to contract is required because the contract links the price to the standard tariff. i.e. if the standard tariff changes then so does the linked tariff without changing the contract.

I don't quite follow the logic of such a position but does that make any sense to anyone else?

It makes sense to me but I don't think it applies to tariffs such as Websaver 11. That tariff isn't linked to the standard tariff, it gives a guaranteed minimum discount on the T2 rate of the standard tariff.

British Gas could change the unit prices of WS11 as long as the T2 rate doesn't go above the minimum discount. The unit prices can be moved around independently of the standard tariff as much as they want but by doing so, they've changed contract terms.

jalexa

Consumerist wrote: »

My understanding of Ofgem's position is that if the price increase would require a change to the terms of contract then no exit fee would be payable. i.e. the contract has been unilaterally changed.
However, where the prices are linked to a reference price (i.e. a discount to a standard tariff) then no change to contract is required....

I absolutely see your argument. You may even be (legally) correct!

However to pursue further my "uber consumer" argument that the "quoted" (or "not quoted") "Ofgem argument" might be (legally) wrong (and is certainly "unfair" through obscurity or obtuseness), I will make reference to British Gas Websaver 11 (one of the tariffs discussed in the thread) Terms and Conditions.

"7.1 We can change the terms of this contract (including price.....). We will let you know if we make a change....If you are not happy you can end the contract....."

Of course, the argument is not about ending the contract, it is about whether a termination fee is payable in the circumstances of ending the contract taking account of 24.3(c).

In looking at the wording of Websaver 11 Terms and Conditions I do not see the argument that "no notice is required" (because the price "differential" is guaranteed with reference to another price). Quite the contrary. The price has gone up and they recognise notice is required. Indeed (and I hope I am wrong), the "obtuse Ofgem" argumement taken to an extreme logical conclusion wouldn't require notification of the price rise! Is anybody arguing that?

Looking at the wording it does not surprise me that on the evidence of some posters in this thread, British Gas are not pushing a "obtuse Ofgem" interpretation. If in fact that really is the Ofgem interpretation.

Consumerist

lektr0n wrote: »

It makes sense to me but I don't think it applies to tariffs such as Websaver 11. That tariff isn't linked to the standard tariff, it gives a guaranteed minimum discount on the T2 rate of the standard tariff.

If "it gives a guaranteed minimum discount on the T2 rate of the standard tariff" then it is linked to a reference rate - the T2 rate of the standard tariff. I assume the T1 rate is the same on either tariff.

BG can vary either tier of the standard tariff as much as it likes providing it continues to apply the guaranteed minimum discount to the WS11 tariff. This it can do without changing the terms of contract and so Ofgem's position is that, in that event, any exit charge would be payable.

According to my understanding of Ofgem, only if the discount was reduced below that guaranteed in the contract, would the exit fee not be payable.

All this is only an opinion based on my understanding, however, and could be incorrect. Since BG have agreed to waive the exit charges on the latest proposed increase, it's a bit academic at the moment but it is likely there will further increases in the pipeline and this matter will, hopefully, be clarified by Ofgem in the meantime.

myozone

So, to sum up if I change from BG's Websaver 10 to Scottish power's Fixed Price Energy 2015 and quote article 24.3(c) to BG. I shouldn't have to pay the £30 exit fee ? :j

Dave.

Consumerist

myozone wrote: »

So, to sum up if I change from BG's Websaver 10 to Scottish power's Fixed Price Energy 2015 and quote article 24.3(c) to BG. I shouldn't have to pay the £30 exit fee ?

Not quite.

Ofgem's apparent position on article 24.3(c) is that the exit charge would be payable (tariff linked, by 6% discount, to standard prices, which BG can vary). However, BG has decided to waive the exit charges on this kind of variable tariff. It's the waiver that you should rely on.

Well, that's my take on it and I hope I've got it right.

milla

Consumerist wrote: »

Not quite.

Ofgem's apparent position on article 24.3(c) is that the exit charge would be payable (tariff linked, by 6% discount, to standard prices, which BG can vary). However, BG has decided to waive the exit charges on this kind of variable tariff. It's the waiver that you should rely on.

Well, that's my take on it and I hope I've got it right.

So do we have to inform BG that we have initiated a switch or will the waiver apply automatically ?

Consumerist

milla wrote: »

So do we have to inform BG that we have initiated a switch or will the waiver apply automatically ?

My understanding is that you need to inform the company of your intention to switch before the new prices come into effect - so, as soon as possible, I would say. There have been reports of some difficulties in getting BG call centres to waive the exit charges so you may need to be insistent.

jalexa

myozone wrote: »

So, to sum up if I change from BG's Websaver 10 to Scottish power's Fixed Price Energy 2015 and quote article 24.3(c) to BG. I shouldn't have to pay the £30 exit fee ? :j

Dave.

Whatever the interpretation of 24.3(c). and whatever BG's response, which has been positively described in some posts, to avoid the termination fee or qualify for the waiver (by my interpretation and understanding) it is essential not just to switch, but to first formally give notice to BG of your rejection of the price rise within the required time frame and then to commence the switch within the required time frame.

HTH